Task force talks reinsurance, bigger pool for individual health plans

The state's task force on health care financing was back in session on Monday, with members considering potential fixes for price spikes and dwindling options in the state's individual health insurance market.

Among the ideas thrown out during a meeting near the Capitol: A "reinsurance" program that would provide a financial safety net for health insurers that happen to draw subscribers with big health costs.

Another idea is to expand the individual market risk pool, potentially by merging it with the group insurance program for state employees.

The task force won't get to final recommendations any time soon, since two more meetings are scheduled for December.

It's also unclear how any work being done by state officials now might mesh with changes put forward by the administration of president-elect Donald Trump, who has signaled that changes are coming to the federal Affordable Care Act (ACA).

Commerce Commissioner Mike Rothman, who is a member of the task force, called the current situation an emergency and said officials must move in the next few months to get a fix in place for 2018. The task force is not addressing premium spikes for 2017, which have prompted DFL Gov. Mark Dayton to propose a rebate program for some subscribers.

"The charge for this body is to look at 2018 and beyond," said Emily Piper, co-chair of the task force and the state's Human Services Commissioner.

The ACA has driven fundamental changes in the individual market, which is where self-employed people and those who don't get coverage from their employer buy health insurance. It serves about 5 percent of state residents, or about 250,000 people.

In Minnesota, the individual market nearly collapsed this summer as health insurers recoiled from the red ink and threatened to stop selling coverage for 2017, according to state officials. As a result, Commerce approved rate increases that average 50 percent or more, plus caps on health plan enrollment. In addition, consumers are confronting tighter limits on their choice of doctors and hospitals.

Before task force members started tossing around ideas on Monday, state officials provided data showing the scope of problems in the individual market.

About 2 percent of enrollees in the individual market during 2015 accounted for roughly 50 percent of the claims costs, according to the Minnesota Department of Commerce. That works out to about 6,000 people would could be called "higher cost" enrollees.

Each of these subscribers generated at least $48,000 in annual claims that year. On average, they had about $100,000 per person in claims, generating about $600 million in claims in the aggregate.

Minnesota health insurers lost money overall during 2015 in the individual market, but a chunk of the losses were absorbed by a federal reinsurance program that was part of the ACA. The program is going away for 2017, which is one reason why insurers are hiking individual market premiums in Minnesota and across the country.

In 2014, the ACA started prohibiting insurers from denying coverage to individuals due to pre-exising health conditions. As a result, Minnesota closed its high-risk pool, which previously provided coverage to these individuals at above-market rates.

Many subscribers moved from the high-risk pool to the individual market, and apparently drove a change in the health profile, according to data presented Monday by the Minnesota Department of Health.

In 2013, about 12,000 people in the individual market listed their health status as poor or fair, according to health department survey results. In 2015, the number grew to about 28,000 people.